MetaTrader 4 Commodity Trading Margin Level : Example of How to Calculate Commodity Trading Leverage in MetaTrader 4

Margin required in this case is 1,000 dollars (your money) if it is expressed as a percentage of 100,000 dollars which you control it is:

If commodity trading leverage = 100:1

1,000 / 100,000 * 100= 1%

Margin required = 1%

(1/100 *100= 1%)

'Trade Forex Trading - Please simplify because I am Beginner'

(Simplify - your commodity trading capital is $1,000 after commodity leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1%) that is your commodity trading margin requirement for your commodities trading account.

The commodity trading margin example shown below, the set commodities leverage is 100:1, the commodity trading margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1 % of their capital, this 1% equals to $2683.07, if 1% equals to $2683.07 then 100% is $268,307

MetaTrader 4 Commodity Margin Level : Example of How to Calculate Commodity Leverage in MetaTrader 4

• If = 50:1 Commodity Leverage - Used Commodity Trading Leverage

Then commodity margin requirement = 1/50 *100= 2%

If you have $1,000,

1,000* 50 = $50,000.

1,000 / 50,000 * 100= 2%

(Simplify - your commodity trading capital is $1,000 after commodity leverage you now control $50,000 - $1,000 is what percentage of $50,000 - it is 2 %) that's your commodity trading margin requirement

• If = 20:1 Commodity Trading Leverage - Used Commodity Trading Leverage

Then the commodity trading margin requirement = 1/20 *100= 5%

If you have $1,000,

1,000* 20 = $20,000.

1,000 / 20,000 * 100= 5%

(Simplify - your commodity trading capital is $1,000 after commodity leverage you now control $20,000 - $1,000 is what percent of $20,000 - it's 5 %) that's your commodity trading margin requirement

• If = 10:1 Commodities Trading Leverage - Used Commodity Trading Leverage

Then the commodity margin requirement is = 1/10 *100= 10%

If you have $1,000,

1,000* 10 = $10,000.

1,000 / 10,000 * 100= 10%

(Simplify - your commodity trading capital is $1,000 after commodity leverage you now control $10,000 - $1,000 is what percent of $10,000 - it's 10 %) that is your commodity trading margin requirement

What is The Difference Between Maximum Commodity Trading Leverage & Used Commodities Trading Leverage?

However, you should note that there is a difference between maximum commodity trading leverage ( commodity trading leverage given by your commodity broker which is the highest commodity leverage you can trade with if you choose to) & used commodity trading leverage ( commodity trading leverage depending on the lots you have opened/open trade positions). One is the broker's (Maximum Commodity Leverage) & the other is commodity trader's (Used Commodity Trading Leverage). To explain this commodity trading used commodities leverage & maximum commodity trading leverage concept we shall use the commodities trading example above:

If your commodity broker has given you 100:1 Maximum Commodity Trading Leverage, but you only open a trade of 10,000 dollars then Used Commodity Trading Leverage is:

10,000 dollars: 1,000 dollars (your money)

10:1

Your have used 10:1 Commodity Trading Leverage, but your maximum commodity leverage is still 100:1 Commodity Trading Leverage. This means that even if you are given 100:1 Maximum Commodity Trading Leverage or 400:1 Maximum Commodity Trading Leverage, you do not have to use all of it. It is best to keep your used commodity trading leverage to a maximum of 10:1 but you'll still choose 100:1 maximum commodity leverage option for your commodity trading account. The extra commodity trading leverage will give you what we call Free Commodities Trading Margin, As long as you have some Free margin on your commodity trading account then your open commodities trades will not get closed by your commodity broker because this margin requirement will remain above required level.

When it comes to commodity trading one of your rules: commodity trading money management rules on your commodity trading plan should be to use commodity trading leverage below 5:1.

In the above MetaTrader 4 commodity trading screenshot example, the trader is using $2683.07, the total controlled amount is $268,307, but commodity trading account equity is $16,116.55, therefore used commodities leverage is ($268,307 divide by 16,116.55) = 16.64 : 1

16.64 : 1 Used Commodity Trading Leverage

Commodity Margin accounts allows traders to control a large amounts of commodity trading units using trading leverage using little of their own capital while borrowing the rest

Obtaining this commodity trading account will enable you to borrow money from the broker to trade commodity trading lots with.

The amount of borrowing power your account gives you what is known as ' commodity trading leverage', & is usually expressed as a ratio - a ratio of 100:1 leverage means you can control resources worth 100 times your deposit amount.

What this means in Commodity Trading terms is that with 1 % margin in your commodity account you can control a trade worth $100,000 with a $1,000 deposit.

However, Trading this margin commodity trading account increases both potential for trading profits as well as losses. In Commodity Trading you can never lose more than you invest, losses are limited to your deposits and usually brokers will close a transaction that extends beyond your deposit amount by executing what is known as a margin call. Commodity traders must therefore try to keep their trading margin requirement level above that required. By using commodity trading money management rules & keeping your used commodity leverage below 5:1.